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Trump administration denies ExxonMobile permission to drill in Russia

Posted at 1:49 PM, Apr 21, 2017

WASHINGTON (CNNMoney) -- The Trump administration has denied ExxonMobil permission to bypass sanctions to drill for oil in Russia.

Treasury Secretary Steven Mnuchin, in a statement Friday, said he consulted with President Trump on the decision.

Exxon had applied for a waver from sanctions imposed by the Obama administration in a bid to resume its lucrative joint venture with Russian state oil giant PAO Rosneft.

Exxon did not immediately return calls for comment.

There are powerful reasons why Houston-based Exxon would want to get back into business with the state-backed firm: Their agreement to form a joint venture, signed in 2011, allowed Exxon to conduct offshore exploration in the Black Sea and the Kara Sea in Siberia.

The undeveloped oil fields are thought to be the most promising in the Russian Arctic, according to S&P Global Platts.

In 2012, the two firms agreed to jointly develop more oil reserves in Siberia and establish a research center in the Arctic.

Plans to build a large natural gas plant near Vladivostock in eastern Russia followed in 2013.

The deepening relationship was put on hold, however, after the U.S., European Union and other Western countries imposed sanctions on Russia in 2014 over its role in the crisis in Ukraine.

Exxon, which has been operating in Russia for more than 20 years, was allowed to finish some of its projects. But then the drilling stopped.

A lot has changed since then. The Russian economy has turned the corner, emerging from a painful recession in the final quarter of 2016.

Oil prices have climbed back above $50 per barrel.